Detroit Bankruptcy Unconstitutional, Judge Rules

Detroit’s bankruptcy filing was ruled unconstitutional by Circuit Judge Rosemarie Aquilina on Friday. The judge is currently holding hearings on three cases involving the filing.

Friday’s ruling will be appealed by Michigan Attorney General Bill Schuette. The AG added that he plans on seeking emergency consideration from the Michigan Court of Appeals about the ruling and wants Aquilina’s rulings stayed pending the appeals process.

In making her ruling, Aquilina cited the Michigan Constitution, which bars any actions that could lessen the pension benefits of public employees. She explained that Thursday’s bankruptcy filing would do this.

Aquilina is overseeing the three cases, which are lawsuits to stop the city of Detroit from filing for bankruptcy. She convened an emergency hearing on Thursday to issue an order blocking Detroit’s bankruptcy filing. However, lawyers and the judge later learned that Detroit emergency manager Kevyn Orr filed the petition five minutes before the hearing began.

In Friday’s hearing, assistant Attorney General Brian Devlin defended the bankruptcy filing, saying, “We can’t speculate what the bankruptcy court might order.” However, Aquilina responded, “It’s a certainty, sir. that’s why you filed for bankruptcy.”

Schuette’s office issued a statement about Aquilina’s s ruling, saying that petitions have been filed to block the judge’s rulings in all three cases. The statement added:

“In addition, the Attorney General filed motions to stay the trial court rulings and any future proceedings while the appeals proceed. Later today, we expect to file additional motions seeking emergency consideration.”

Aquilina issued a declaratory judgement, saying that the Detroit bankruptcy is a violation of the constitution. In her order, the Circuit Court judge added that Orr needs to withdraw the bankruptcy filing and that the governor may not authorize any more Chapter 9 filings.

Now that the Detroit bankruptcy has been ruled unconstitutional, it will be up to appeals or bankruptcy court to determine what the next move will be.

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